Alphabet Q2 2022 earnings fall below expectations as Google slows down hiring
Alphabet is "not immune to economic headwinds," as shown in the latest earnings report.
What you need to know
- Alphabet reported its Q2 2022 financial earnings on Tuesday.
- The company reported a 13% year-over-year growth, a significant decrease from last year's 62% growth during the same quarter.
- Google recently announced that it was slowing down hiring for the remainder of the year with a temporary two-week pause.
Google's parent company, Alphabet, announced its Q2 2022 financial earnings on Tuesday, reporting $69.69 billion in revenue. This is a 13% year-over-year growth compared to the same quarter in 2021, although a large decrease compared to the 62% growth witnessed in that quarter.
As a result of slowed growth, the company missed analyst expectations of $69.9 billion (via CNBC). YouTube, often a bright spot for the company, also missed analyst projections, bringing in $7.34 billion vs. an expected $7.52 billion. This is likely due to increased pressure from competing apps like TikTok, signaling a shift in the market that sees younger consumers using the popular app as a search tool.
Meanwhile, Google Cloud continues to lose money, but revenue continues to grow compared to the previous quarter and the same quarter last year. That said, it still narrowly missed revenue expectations for the quarter, with a reported $6.28 billion vs. $6.41 billion expected.
"In the second quarter our performance was driven by Search and Cloud," Alphabet and Google CEO Sundar Pichai said in a statement. "The investments we've made over the years in AI and computing are helping to make our services particularly valuable for consumers, and highly effective for businesses of all sizes. As we sharpen our focus, we'll continue to invest responsibly in deep computer science for the long-term."
As far as sharpening its focus, the company recently announced that it was slowing down hiring for the remainder of the year as it focuses on "streamlining processes." Part of that slowdown involves a two-week hiring pause allowing teams to "prioritize their roles and hiring plans."
Jesse Cohen, senior analyst at Investing.com, comments on the report, which, despite the misses, sent the company's stock up in after-hours trading.
"Alphabet delivered a disappointing quarter with the search giant underperforming our expectations across almost all business units. Despite the underwhelming quarter, expectations were so low that investors blew a sigh of relief, sending the stock higher. With a relatively low price-to-earnings ratio of 20, Alphabet remains one of the cheapest of the megacap tech companies from a valuation perspective."
Meanwhile, the company's outlook for the remainder of 2022 doesn't look too bright, noting that the growth seen in 2021 will continue to weigh on this year's revenue growth, particularly with services like YouTube, where advertisers are reducing spending.
"Going forward, the very strong revenue performance last year continues to create tough comps that will weigh on year-on-year growth rates of advertising revenues for the remainder of the year," Ruth Porat, CFO of Alphabet and Google, said during the earnings call. "In YouTube and Network, the pullbacks in spend by some advertisers in the second quarter reflects uncertainty about a number of factors that are challenging to disaggregate."
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Derrek is a long-time Nokia and LG fanboy who loves astronomy, videography, and sci-fi movies. When he's not working, he's most likely working out or smoldering at the camera.